Young Aussies are scrambling to buy cheap properties in Asia

Aussie Matt Gillespie bought a 22-room property in Japan for just $196,000.

ASIA-based investors may have developed a controversial love affair with Australian real estate but the affections appear to be running both ways.

New research shows a growing number of young Australians have been snapping up homes in Asian countries, capitalising on lower prices and higher rental returns compared to property Down Under.

Aussie investors’ main target has been Japan — the region’s most mature economy and the world’s third richest country by nominal GDP.

ASX listed international transfer company OFX noted transaction activity from Australian dollars into Japanese Yen increased by 39 per cent over 2015-2017.

Aussie investor Matt Gillespie’s property The Ranch where he operates his company Hakuba Ski Tours.

The company estimated nearly 60 per cent of the transactions were related to property investment.

OFX chief operations officer Adam Smith said Millennials accounted for a large share of the Australian investment into Japan.

“Overseas property purchasing by most age groups of Australians has been on a gradual decline since 2013, (but) 18 to 30-year-old Australians have maintained a steady increase,” Mr Smith said.

OSX’s Michael Judge said Japanese real estate was generally undervalued.

The average rate of increase in millennial transaction activity was about 23 per cent each year, monitored over five years, he added.

Queenslander Matt Gillespie, 30, was among the Millennials who recently bought property in Japan.

Mr Gillespie said he was enticed by the cheap prices — he was able to secure a 22-room ski resort in the region near where the 1998 Winter Olympics were held for just $196,000. Prices in the area are now worth about $100,000 more than when he purchased 19 months ago.

The price was low enough for him to pay in cash, which he stumped up by selling his Sunshine Coast home and a share in a small business.

“It would have been great to buy a lodge in somewhere like Canada but there was no way I’d be able to afford that,” he said.

“Japan appealed to me because it was really cheap and the prices have gone up since I bought.

Japanese real estate is considered undervalued because prices are low relative to locals’ incomes.

“I also liked Japan because even though you won’t get financing from the banks, there are no restrictions on what you can purchase because of the trade agreements we have with Japan.”

Mr Gillespie said most of the neighbours of his lodge The Ranch were other Aussies. “It feels like the area is transforming. There are a lot of Australians buying in the area.”

Australian purchases of overseas properties were strongly correlated with fluctuations in the exchange rate, according to OFX.

Much of the Aussie interest in Japanese real estate has been focused on the ski tourism sector. Picture: Hakuba Snow Tours

“Purchasers are being savvy, timing their acquisitions at moments where their dollars are working hardest against foreign currencies,” Mr Smith said. “When the Australian dollar is strong against the Japanese Yen, for example, we see an increase in property related transfers to Japan.”

OFX head of corporate dealing Michael Judge said Asian real estate was appealing to Aussie investors because it was generally undervalued, particularly in Japan.

By contrast, the Organisation for Economic Cooperation and Development has suggested Australian house prices are somewhat overvalued.

“I think ideally, the Millennials buying in Japan would like to own real estate in Australia, but they see an overseas investment as a potential stepping stone,” Mr Judge said. “Millennials want to build their wealth and have a global outlook.”

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